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Boredom & Excitement = Timeframe
Since recent developments in my thinking, I basically stopped doing intra-day trading and moved up to the daily charts. This seems to be suiting my situation better, although of course the result is that there is a lot of waiting around.
I've noticed that my trading life is now broken up into 3 categories. 1) Daily Analysis. 2) Study. 3) Trading activity. Trading activity is in fact the smallest amount of time needed. Once a trade presents itself, it is a matter of a few minutes to do my margin calculations and actually execute it. I do my daily analysis in the evening and this does not seem to take more than an hour, but I check the close of the daily candles at 5PM New York time (early morning for me, before the Asian session begins (the start of a new day)) - this represents the end of the trading day (Asia > Europe > US). The interesting thing here is that the closed daily candle can show an large amount of intraday volatility but in the end the overall market sentiment was stable and unchanged. This week I have looked at some of these candles and been grateful that I was not in the mix at an intraday level, because of course I would have been whipsawed to death as usual. This has been confirming my belief that a lot of that intraday volatility is due to commercial trading activity and something it would be wise for a tiny flea like me to stay out of. Now the point here is I'm seeing that a new power is required of me to transition to this trading style and stick with it. It is a power I imagine very many newbie traders have zero interest in - it is called: PATIENCE Thinking again about the 95% of washouts in this market, a newbie traders passion for this subject is fueled by what he sees as opportunity. An opportunity to get rich, to quit his job, to travel, to get a cool car - what ever... Lets face it, these are the things he holds in the back of his mind and this makes him EAGER. This state would be the exact opposite to patience. Patience is a hindrance, he see's it as a block in his way, a waist of all the potential gains that are to be had each and every day in the market. He wants the FAST TRACK. Of course if that is your state, then you are going to want to do intraday trading, possibly even down on the 1 and 5 minute chart. I've noticed that the lower the time compression, the higher the level of the emotion we normally call "excitement" - but I am not so sure it is excitement. It is more like the pressure one feels in a fast paced videogame. It is the pressure to make decisions quickly. If you don't believe this, try trading the weekly chart and see how much time you have to make your mind up. Excitement simply does not appear. Instead the danger is an opposite emotion called BOREDOM. I say that in this case boredom is really the pain of feeling like you are missing opportunities. These are the two extremes, and the point is that they are related to time frame. If trading really were like a videogame, then I would be qualified to play it on the tick chart, and I could probably compete with some of the best in the world - but it isn't. A videogame (in order to be a game) obeys rules that make it fair, even if the odds are stacked in the baddies favour - the player still has a CHANCE which is finely tuned in order to be there so that all the spotty kiddies don't have a tantrum and throw their controller at the TV. It is worth considering that every player in the market - as much as possible - wants to make sure you have NO CHANCE. You are trying to create your own chance by the development of a trading edge - but I have found that trading intraday was akin to playing against a component who frequently cheats. This is just due to the fact that the commercial traders do things intraday that have nothing to do with the information that is available to me. They are, in fact, PLAYING A DIFFERENT GAME. However on the higher time compression I can see that this effect is lessened, and you begin to play a game with a different group of individuals called The Large Speculators. At this level, the information available to me IS relevant - they are playing THE SAME GAME. More on this later.... |
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